Inner-city job project cuts welfare costs, turns profit

WinnipegFreePress.com – Business – Group tallies social benefits Renovation firm branches out, takes on commercial assignments
Posted: 30/08/2010.   By: Martin Cash

During its first seven years in business, Inner City Renovations has saved the public purse close to three-quarters of a million dollars.

That calculation of social assistance payments saved and income taxes paid is one indication of the success of the construction/renovation firm, which was formed in 2002 with a dual bottom-line mandate: the traditional financial one and a far-less-common social one.

Group tallies social benefits

— Total revenue (2003-2009) — $9.3 million

— Total (social) cost saving (to July 31, 2009) — $741,000

— Total grants and subsidies (2003-2009) — $832,000

— Average change in societal contribution (2003)* — $13,600

— Average change in societal contribution (2009) — $6,381

— Total investment required (2003 to 2009) — $1.3 million

* That is determined by the following formula: Annual social assistance before hire minus annual income tax paid before hire plus annual income tax paid after hire equals change in societal contribution

The firm has been able to achieve a positive return on investment from its social mandate almost since Day 1. And for the last two years, it also has produced a financial profit.

That’s probably one of the reasons why its recently retired president, Marty Donkervoort, is receiving special recognition this year by Ernst & Young as one of its Prairie region entrepreneurs of the year.

Inner City Renovations is owned by the non-profit agency called Community Ownership Solutions. Its mandate is to provide quality employment for inner-city, low-income residents and quality services to inner-city, non-profit community organizations.

While it has been the builder of choice for many of those community organizations, it’s now winning tenders on all sorts of commercial projects as well.

For instance, it is the general contractor on the top-to-bottom renovation of WinnipegREALTORS’ 15,000-square-foot headquarters on Portage Avenue.

“We are very pleased with the work they’re doing,” said Dan Brooks, whose job title with WinnipegREALTORS includes property manager. “They’re ahead of schedule at this point.”

What ICR and its 20-person workforce is showing the world is that with a little effort and the right attitude, formerly under-employed folks who are often marginalized from the mainstream labour market can be brought in and may even become more productive than the average employee.

Bob Urbanski, ICR’s foreman on the WinnipegREALTORS job, said his crew of mostly aboriginal workers goes out of its way to do a good job.

“It’s totally amazing what some of these guys will do for you on the work site. I have not experienced that sort of thing in the past on other work sites.”

At one point, half of ICR’s staff had a criminal record (although that number has come down). Close to two-thirds of them are aboriginal and nearly half didn’t graduate from high school.

But the firm has won awards for its outstanding contribution to the apprenticeship program and has such low staff turnover that it may have to alter its social mandate or make a concerted effort to grow so that it can continue to hire more people from its target audience.

John Baker, ICR’s new general manager who took over recently from Donkervoort, said there are discussions underway to potentially take over the space beside its current Jarvis Avenue offices.

“We’re thinking of setting up a carpentry shop,” Baker said.

ICR already has about four staffers enrolled in the carpentry apprenticeship program.

ICR has built many infill houses in the inner city through the Housing Opportunity Partnership (HOP) program, but its sweet spot, according to Baker, is commercial renovation work in the $400,000-to-$500,000 range.

“There is a small sliver of the economy that is motivated by the social component,” Baker said. “The analogy I use is the hybrid car. There are many people who think it’s a good idea, but only a small percentage of people are willing to pay the price.”

But ICR’s experience is starting to produce a body of work that demonstrates commercial success along with a saving to society that can be calculated.

Donkervoort is writing a book on his eight years at ICR and will be teaching a course on social enterprise in the University of Winnipeg’s business program next year.

“It is my hope that ICR has set a precedent and shown that this is a viable alternative,” Donkervoort said in an email exchange.

ICR required some start-up grants, but subsequently accessed training and special grants that would have been available to any company.

Donkervoort said it’s a small price to pay for the community, considering the cost of keeping one person incarcerated for one year or providing retraining assistance.

“Never mind the costs related to social-welfare assistance or unemployment payments, missed income tax payments and various social costs associated with systemic poverty,” said Donkervoort.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 30, 2010 B8

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